ARC’s Top 10 Best Practices in WMS Efficient warehouses are clean, well-ordered with written, available standard operating procedures that reflect the actual operation of the warehouse. Moreover, sophisticated Warehouse Management System (WMS) technology now enables best practices. Here are our top 10 questions to determine if your WMS delivers best in class performance. The best companies in your industry should answer “Yes” to most questions. These 10 questions identify weak warehouse management practices and processes. Each “YES” indicates you have achieved a degree of operational excellence.

1. THOUGHT LEADERS FOR MANUFACTURING & SUPPLY CHAIN
ARC INSIGHTS
By Simon Bragg
These 10 questions identify weak
warehouse management practices
and processes. Each “YES” indicates
you have achieved a degree of
operational excellence.
INSIGHT# 2003-05E
JANUARY 30, 2003
ARC’s Top 10 Best Practices in WMS
Keywords
WMS, OpX, Supply Chain
Summary
Efficient warehouses are clean, well-ordered with written, available stan-
dard operating procedures that reflect the actual operation of the
warehouse. Moreover, sophisticated Warehouse
Management System (WMS) technology now enables
best practices. Here are our top 10 questions to de-
termine if your WMS delivers best in class
performance. The best companies in your industry
should answer “Yes” to most questions.
1. Can You Handle Multiple Orders Simultaneously?
Operators can only tackle one order at a time in paper-managed ware-
houses. About two-thirds of medium sized (10,000 m2) warehouses and
about one-third of large (70,000 m2) warehouses are still paper-based. Im-
proving productivity, by minimizing travel time in the warehouse, requires
sophisticated pick strategies such as task interleaving, wave or 2-phase
picking that are too complex to manage on paper. Radio Frequency (RF)
and bar coding systems let operators handle multiple orders together. Less
than 1 percent of warehouses use voice-directed picking, which improves
productivity of hard to handle items, but may reduce inventory accuracy.
2. Does Your Inventory Accuracy Exceed 99%?
All warehouses should achieve 99 percent bin-level accuracy. The top 10
percent achieve around 99.95 percent accuracy. Regular cycle counting is
the first step. Initially, the system should determines cycle counting sam-
pling frequencies from a pareto analysis of each SKU’s volume value. Next,
the system should help managers focus on error-prone SKU’s. Better algo-
rithms request a count when the bin is easy to count, e.g. instantly after
picking if the slot is empty or has just a couple of items. However, to
achieve 99.95 percent accuracy, the strategy changes because everything
needs to be right. Since a SKU can be in the wrong bin, it is then better to
count by aisle.

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3. Do You Give Customers a Totally Reliable Delivery Date?
For same-day or one-day delivery promises, batch integration once or twice
a day between the WMS and ERP systems cannot support reliable order
promises. For this, WMS and ERP inventory data must be only minutes out
of sync. Particularly sophisticated is the ability for sales staff to modify de-
livery promises given warehouse capacity and transportation constraints.
4. Can Your Numbers Identify Changes that Most Impact
Performance?
At most managers’ fingertips should be basic metrics such as units moved
per man hour, orders unfulfilled on time, the age of unfulfilled orders, and
costs per unit moved. Comparing results by strategy shift or operator en-
ables managers to continuously find better strategies, e.g. adjacent slotting
of items that move together, operator assignments, or pick sequences.
5. Can You Smooth the Workload on Each Section in the DC?
Poor practice overloads one section of a Distribution Center (DC), while
another stands idle. Managers should plan, monitor, and balance the work-
load in every section. Monitoring is common. Most warehouses with
significant automated material handling enable managers to picture, in near
real-time, the loads on every section, showing which operator re-
assignments will balance workloads.
Planning is less common. About one-fifth of large US warehouses use en-
gineered labor standards, basically time and motion data, to calculate the
time each task should take for comparison with the actual time taken. Usu-
ally, these standards determine operators’ bonus payments, but using this
data to better plan daily labor requirements also lets managers set a target
completion time for an activity, such as a pick wave, and calculate the re-
quired labor resources.
6. Do You Pack Items to Simplify Downstream Partner Tasks?
Poor practice views warehouses as inventory stores. Good practice brings
upstream and downstream activities into the DC. Carrier compliance label-
ing, export documentation, and correct cartonization simplifies transport
partners’ activities. Better still is sophisticated sortation, e.g. loading trucks
in unloading order, even loading roll cages to match the sequence retailers
display items along an aisle. Some US retailers demand that DCs select the
correct destination and carrier from the load’s weight or volume. Ad-

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vanced DCs enable postponement manufacturing, adding features, options,
and customization of core products with e.g. country kits.
7. Can You and Your Customers Do Single Scan Receiving?
Poor receiving practice scans each inbound item. Best practice scans one
tag, which contains or points to information about the whole consignment.
Often, single scan receiving is enabled by RFID devices or bar codes and
Advanced Ship Notices (ASN) between customers and suppliers. Small
suppliers should be provided with downloadable copies of labels that they
affix to the consignment.
8. Can Each Warehouse Manager Support Colleagues Across
Your Multi-site Distribution Network?
Poor practice views warehouses as stand-alone entities. Good practice en-
ables each manager to view inventory status across all DC’s in the network.
Customers should be able to check order status information in near real
time, delayed by only a few minutes. Better still is the ability to identify
problems and alert managers, within minutes, across the network if there
is, for instance, a stock-out. In principle, customer orders can be transferred
to neighboring DC’s. Good systems do not inundate managers with alerts,
but filter them and send appropriate alerts to the right managers. Great
systems, of which there are only a few, include rules or agents that auto-
matically execute and perform experienced managers’ actions, for instance
rescheduling pick-waves based on early or late arriving trucks.
9. Have You Eliminated Manual Quality Checks?
Poor warehouses require manual quality checks; good ones have, justifia-
bly, eliminated a non-value adding process. There are two ways to
eliminate manual quality checks. First, create a completely reliable opera-
tion, and the system should support sampling strategies that more
frequently sample error prone processes. For each sample, the system
should drive operators through the checking procedure. The system
should also make clear at what point the operation is reliable and when the
quality check adds no additional value.
Second, if the cost of errors is far greater than the value of the items, then
the process should be automated. Automated weight checks are common
in pharmaceuticals, and will be adopted in other industries. This requires

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accurate data. However, in some industries such as semiconductors, the
items are insufficiently heavy and different for this approach to work.
10. Is the Supply Chain Capable of Being Reversed?
In Europe, the ability to track and return packaging is, thanks to legislation,
a necessity. Failure can result in $30,000 fines. Usually goods return to a
specialized, often outsourced, centre. For such returns, poor practice dou-
ble ships items first to an outbound warehouse for onward movement to
the returns warehouse. Best practice requires the customer to gain authori-
zation. Via a portal, the receiver steps though a workflow that categorizes
the problem such as damaged packaging or product, wrong quantity, or a
quality problem. This can be an up-selling opportunity. Then the receiver
is told where to send it, and uses their PC printer to print a bar code label
containing disposition instructions for inbound receiving and shipping to
an address.
Recommendations
Now that you’ve taken the test, how many times did you answer yes? The
scoring reflects ARC’s impression, based on conversations with manufac-
turers, consultants, and suppliers, as to where most warehouses are today.
• If you scored under 3, the good news is that there are many opportu-
nity to improve performance and the profitability of your company.
• A score of between 4 and 6 reflects, we believe, pragmatic use of avail-
able technology, and perhaps fairly average supply chain performance.
• Scoring 7 or 8 reflects early adoption of the most proven warehouse
management technologies. Moving to the next level takes care, as those
technologies are not yet fully proven.
• A score of 9 or 10 indicates your company is at the leading, probably
the bleeding, edge of technology adoption.
Please help us improve our deliverables to you – take our survey linked to this
transmittal e-mail or at www.arcweb.com/myarc in the Client Area. For further
information, contact your account manager or the author at sbragg@arcweb.com
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